After listening to Darren Woods and Kathy Mikell, the CEO and CFO (respectively) of Exxon Mobil (XOM) during the Exxon Mobil 2021 Corporate Plan Update, I am convinced that XOM is on a path for long-term value creation.
I feel that way because XOM is committed to being the leader of Big Oil in terms of revenue, earnings, growth of revenue and profits, and growing its low carbon businesses to the point where they are leaders in that field.
Specifically, I am most excited about their plan to lead the (expected) two trillion-dollar carbon capture and storage industry. XOM has already built five large-scale carbon capture and storage facilities around the world and is in the process of making several more. It is also planning to develop the first large-scale carbon capture and storage facility in the United States near Houston, Texas.
Exxon also has a multi-step plan first to develop and then commercialize the use of hydrogen as a fuel. The project’s first stage is to use the fuel internally to lower corporate greenhouse gas emissions. Once XOM has proven the technology and shown that it is a reliable and stable fuel, it plans to commercialize it.
I am very excited about these plans for the future from XOM and believe it represents a massive opportunity for value creation. I am not alone in thinking this, as of the last 57 bloggers who have blogged about Exxon Mobil, 87% are bullish. It also has one of the highest Smart Scores, as you can see in this oil stock list.
I am bullish on XOM because I believe the company will lead the revolution away from carbon-based fuels and create a lot of value for investors along the way.
Recent Results and Dividend
Exxon Mobil’s stock has been trading between $44.29 (the 52-week low set on January 29, 2021) and $76.00 (the 52-week high set today).
Exxon brought in revenues of $241.1 billion over the last twelve months.
The company has reported third-quarter earnings of $1.58 per share, beating analyst estimates of $1.52 per share by $0.06. It has also reported $3.33 in earnings per share for the first nine months of 2021, beating analyst estimates of $3.17 by $0.16 during that period.
XOM currently pays a dividend of $0.88 per quarter. This is a dividend yield of 4.7%; Exxon Mobil has not increased its dividend since May of 2019.
The company has a solid balance sheet. XOM has a current ratio of 0.90, so it has enough current assets on hand to pay its bills for almost a full year.
When I calculated the stock’s intrinsic value by modeling discounted cash flows, I pegged it at $147.69. I believe that its continued growth in revenues and free cash flows and its plan to dominate the energy transformation to a non-carbon one make this a great company.
Wall Street’s Take
13 Wall Street analysts currently cover XOM and have issued 12-month price targets. Of the 13, six rate the stock as a Buy with a high forecast stock price of $100.00 and a low stock price of $62.00. Seven analysts who cover Exxon Mobil rate it a Hold.
The stock comes in as a Moderate Buy, and the average Exxon Mobil price target of $77.08 implies 2.9% upside potential.
Conclusion
Based on the intrinsic value of this stock, the Wall Street analyst’s estimates, blogger estimates covering Exxon Mobil, management’s growth plan, and how XOM plans to dominate the post-carbon fuel world make me bullish on this stock. I think that XOM’s plans to continue to create more revenue, free cash flow, and value for investors make it an outstanding stock to be bullish about.
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